Massachusetts Regulators Could Punish DraftKings for Accepting Illegal Bets

The Massachusetts Gaming Commission (MGC) is weighing different punishment options for DraftKings after the company illegally took tennis bets on unauthorized events.

The MGC met Monday to discuss the action of DraftKings, which is headquartered in Boston, which involved the acceptance of hundreds of different bets worth nearly $8,000 on the UTR Pro Tennis Tour. This event is not on the approved catalog that was released by the MGC and is therefore illegal for operators.

Regulators may pursue different courses of action such as fines, reprimands, or even harsher punishments if deemed necessary.

DraftKings told the MGC in May that the tennis events were offered because of a miscommunication between the trading and compliance teams. The company said the trading team copied and pasted the betting lines for the events without checking with the compliance team that they were legal in Massachusetts.

All UTR bets were voided in the aftermath. Winners were deducted their profits and left with their original balance, while losers were refunded their stake. DraftKings also reported itself to the MGC on March 23, the same month as the first incident.

The MGC’s session was held behind closed doors, and the topics that were discussed were highly generalized when made available to the public. That’s at the request of DraftKings, which said that the discussions involve internal processes at the company that, if shared, could give public bettors a leg up over the company.

“Some of it is competitive in nature and also potentially enables customers to more easily exploit us if talked about in the public forum,” said Jake List, senior director of regulatory operations at DraftKings. “So that was the reason for requesting the closed session and the general summary already provided.”

This is not the first time that legal sports betting operators have shared copy-and-paste errors with the MGC. Other sportsbooks came under fire from the commission for offering betting odds on events involving in-state colleges and universities, which is illegal under Massachusetts law. 

DraftKings also previously had its request to publish betting lines for the Boston Marathon, which would have been a  breakthrough for betting on long-distance running, denied.

The MGC did not reach a verdict on DraftKings fate during the Monday meeting. It may still let them go with a warning or could come down hard on them.

List shared with the MGC that DraftKings takes the incidents “very seriously” and has already done its best to remedy the effects in public and private.

The MGC shared the same sentiment and is becoming increasingly unnerved by the recurring problems pertaining to the approved betting catalog.

“I am a little frustrated, and I would like to make sure this practice doesn’t continue,” MGC Chair Cathy Judd-Stein said. “We just really need to make sure that operators know this is something that the commission takes very seriously.”

DraftKings is the leader in Massachusetts sports betting by revenue and betting handle, even outpacing national leader FanDuel and other members of the “Big Four” (the leading sports betting operators) Caesars and BetMGM. The MGC reported DraftKings’ online betting handle reached $159.4 million in June, leading to $15.5 million in revenue.

The next few months are expected to be the busiest of the year for DraftKings and other sports betting companies as the NFL and college football prepare to make their return. Although Massachusetts bettors cannot place wagers on Boston College or other in-state schools, they can bet on other colleges. They can also support the New England Patriots in their quest for their seventh Super Bowl championship.